Vic Govt splurges on IT in budget

blog Those of you with your eyes on public sector IT spending will no doubt be hanging out for next week’s Federal Budget, where there are always a few multi-million-dollar gems laid out in terms of big-spending IT packages. However, it’s not always the Federal Government which splurges on major IT projects, as this week’s budget in Victoria showed. According to a statement issued by the state’s IT Minister Gordon Rich-Phillips, there’s at least $19 million in the budget for major IT initiatives, as Victoria pushes towards meeting the goals outlined in its recent whole of government IT strategy. Rich-Phillips tells us:

“The ICT Strategy provides high-level direction on the use of ICT to deliver better government services and improve ICT management in Victoria and is supported by 50 specific actions,” Mr Rich-Phillips said. “New funding will allow us to deliver on the key actions as set out in the ICT strategy and implement new initiatives to improve industry engagement and outcomes in ICT procurement, as well as improving management of ICT projects.

“The allocation of $19 million over four years for technology in the 2013-14 Victorian State Budget also supports the extension of core initiatives under Victoria’s Technology Plan for the Future – Information and Communication Technology.“This includes support for growing our local companies and other industry development activities and ICT skills initiatives.

The Coalition Government is committed to a strong and competitive ICT industry in Victoria. Responsible financial management by the Coalition Government has enabled increased investment to further strengthen and grow capacity in Victoria’s ICT industry.

However, Rich-Phillips’ brief statement, according to iTNews, didn’t outline the total sum which Victoria actually allocated on technology in the budget. The site has tracked down a number of discrete IT spending packages in agencies ranging from the Port of Melbourne, to Melbourne Water to VicTrack and the Department of Justice. iTNews writes (we recommend you click here for the full article):

“Victoria’s emergency services, water utilities and transport agencies have emerged from this year’s state budget with money for IT projects.”

To be honest, it’s not really a surprise that the Victorian Government has a raft of major projects going on at the moment. Repeated audit and Ombudsman’s reports have shown that the state’s IT systems are in a major state of disrepair, with the state recently suffering major problems with IT project governance. The only question we have is: How effectively will the state use the millions of dollars of new funding allocated this week? Will much of that money end up flushed down the toilet as a result of failed, delayed, and over-budget IT projects? Only time will tell.

8 COMMENTS

$19 million over 4 years? that is not a lot at all. Hire 40 odd mid level technical people and you’ve blown that $19 million in that 4 year period. But you never just need the tech people, you need project managers and equipment for everyone at the very least. $19 million will be gone in a flash.

It is fairly safe to double the average salary of each employee to estimate the actual cost to the business. Think training, insurance, equipment and everything else I don’t know. Obviously not for the execs; but your average 40k/yr worker costs a business more than 40k/yr.

+1 – The 2011/12 Spend as estimated by Intermedium was around $1.4bn op-ex, and $241m Cap ex. $19m (over 4 years) will however enable some small proof of concepts that might create the business case to stimulate further investment next year.

Hmmm … it is always difficult to work one’s way through the budget papers and not always obvious what constitutes an “ICT’ project and what doesn’t. Just for context, however, here is the history of my analysis of ‘ICT’ project funding in the Vic State Budgets over the past decade:

So the 2013/14 budget has a good lick of investment that may lead to ICT procurement, but is hardly a ‘splurge’.

Projects of an ‘ICT’ nature are better thought of as ‘ICT enabled business change programs’, so on this basis the 2013/14 budget contains the following projects which total a TEI (i.e. total estimated investment in opex and capex) of around $174M over 5 years as follows:

$12M DHS – Services Connect
Services Connect responds to the need for transformative change to human services including disability, child protection, mental health and housing assistance, ensuring an efficient but more client-centred model. Funding will support the extension of Services Connect lead sites and the implementation of new elements in the model. It will also fund testing and development of the systems and processes needed for Services Connect to function effectively and efficiently.

$9.5M DoJ – Enhancing Court IT & Facilities
Court IT infrastructure will be upgraded to improve performance and reliability, and court facilities improvement works will be undertaken. These investments will improve the courts’ ability to manage demand and will support the provision of efficient court services to the community.

$27.7M DoJ – Asset Confiscation Scheme
The Asset Confiscation Scheme will be enhanced to increase the identification and confiscation of the proceeds of crime to disrupt financially motivated, organised and serious crime.

$34.6M DoJ – Reforming the collection and enforcement of legal debt in Victoria
A new model for the collection of fines and legal debt will be implemented to improve collection rates across a number of types of debt, increase enforcement capacity and sanctions and introduce more payment options. Funding for ICT improvements is also provided subject to proving the scope and deliverability of the work.

$23.3M DoJ – Police Information Process and Practice reform program
The Police Information Process and Practice reform program will address immediate issues to maintain the performance of core Victoria Police information systems and commence planning for longer-term reforms to ICT systems and processes.

$24.7M DoJ – Australian Communications and Media Authority compliance
System upgrades will take place for Victoria State Emergency Service, Corrections Victoria, the Sheriff’s Office and Life Saving Victoria to ensure continued access to high frequency radio channels critical to support emergency service delivery.

$19M DSDBI – Vic Technology Plan for the Future and Gov ICT Strategy
Additional funding is provided to continue initiatives in Victoria’s Technology Plan for the Future and for implementation of the Government ICT Strategy 2013-14.

$12.8M DSDBI – Business VictoriaOnline
Business Victoria Online is an integrated online platform that provides small businesses with easy access to information, advice and transactional services. Funding is provided to extend this service and leverage the platform more broadly across government to bring greater benefits to businesses and contribute to reducing red tape.

$10.5M DTF – Land Tax Compliance
Funding is provided to enable the State Revenue Office to hire and train additional staff to undertake further compliance work on Land Tax Principal Place of Residence exemptions. To support this work, computer-based solutions will be developed to assist in the investigation process and the timely issue of assessments.

The more interesting perspective, however, is to look at how the flow of ICT spending in the budgets add up cumulatively to produce a funding base in any one year and how this is changing over time. ICT funding in any one year, for example, is the product of funding from initiatives from the previous 5 year’s budgets. I’ve maintained an analysis of the publicly available information from the budget papers which shows the following picture when you look at the annualized effect of the budgets:

Hmmm … in total $2.4B of investment in ICT enabled business change projects and infrastructure renewal. [This is not the total of ICT spend of course because many projects are funded within department and agency appropriations].

So … the pattern over time is that the Vic Gov poured quite a lot of money into ICT in the early years of the last decade … and has been becoming less and less enthusiastic about ICT investment over the past 5 or so years. One only needs to read the reports by the Ombudsman and VAGO to understand the Government’s reticence to keep creating funding honey pots for big old-school ICT projects …

To be clear: This is not in any way a political statement … just an observation of fact.

The Victorian Government is not quite in the invidious position of Queensland, but the essential problem is that too much money has been wasted ineffectively over the past decade … meanwhile (gasp!) an increase of investment is required to address ageing infrastructure and applications (Microsoft XP etc.) and to modernise service delivery. Unless there is a radical change in approach, the Government now needs to step up ICT investment during a decade when revenues are declining and confidence in the ability of department and agency executives to successfully manage ICT projects is at a low ebb … not good.

The challenge for the new ICT Strategy is to find a more cost effective way of sourcing and managing the ICT capabilities needed to modernize the public sector. Continuing with the historical approach is just not an option.

Hence … Agile Thinking + Shared (cloud services) Platforms = Innovation and Productivity. Time, and money, is running (has run) out. The question is ‘how’ to do this … not whether or not it is a good idea … IMHO.

hey Steve, great post! You have clearly done a lot more research into this than I have — I appreciate this comment greatly. It does indeed look as though this is only a small-spending year for Victoria.

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